Telenor owns 26.6% of VimpelCom’s voting stock, whereas Alfa Group has 32.9%. The Russian mobile operator is effectively controlled by Alfa Telecom (now known as Altimo) after a VimpelCom shareholder vote in June last year left Telenor with a minority position on the board.
Telenor’s long-running dispute with Alfa stems from VimpelCom’s $231m acquisition of the Ukrainian mobile operator last November. Ukrainian Radio Systems operates under the WellCom brand. Telenor is worried the acquisition will have an impact on a separate Ukrainian mobile phone operator, Kyivstar. Both Alfa and Telenor have a stake in Kyivstar (Alfa has a 43.5% stake), but Telenor has the majority stake with 56.5%.
Telenor bitterly disputed Alfa’s decision to steamroller VimpelCom’s acquisition of WellCom and viewed it as a challenge to Kyivstar GSM, which is the second largest mobile operator in its domestic market. Telenor had argued that the deal had no business merit and would destroy shareholder value.
The dispute is so bitter that three of Telenor’s directors at VimpelCom are blocking adoption of the operator’s budget for this year. There is no doubt that Telenor will continue to use its minority position on the VimpelCom board to cause maximum disruption.
Telenor has now filed its suits to the Moscow Arbitration Court, accusing Vimpelcom of convening an illegal extraordinary shareholders’ meeting (to sanction the Ukrainian Radio Systems acquisition) and providing false and misleading information to Vimpelcom shareholders.
Telenor argues that bypassing the Vimpelcom board for the acquisition was illegal under Russian law. It also says that $231 purchase price was over inflated. Telenor says all acquisitions needs to be approved by eight out of the nine Vimpelcom board. Alfa realized it would never get this approval and instead called the EGM, which then approved the deal.
